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REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

NOTE 3 - REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

 

Net Revenue

 

For the three months and six months ended June 30, 2023 and 2022, the components of revenue from contracts with customers and the related timing of revenue recognition is set forth in the table below (in thousands):

   Three Months Ended June 30,   Six Months Ended June 30, 
   2023   2022   2023   2022 
                 
Product revenue:                    
Appliance sales to VIPs  $1,521(1)  $2,074(1)  $3,219(1)  $3,937 
Center revenue   25    219    99    405 
Total product revenue   1,546    2,293    3,318    4,342 
                     
Service revenue                    
VIP   918    1,161    2,207    2,052 
Billing intelligence services   219(3)   252(3)   433(3)   672 
Sleep testing services   313    173    574    210 
Myofunctional therapy services   261    257    478    477 
Sponsorship/seminar/other   138    48    243    75 
Total service revenue   1,849    1,891    3,935    3,486 
                     
Total revenue  $3,395   $4,184   $7,253   $7,828 

 

(1) Appliance revenue from the sale of products is typically fixed at inception of the contract and is recognized at the point in time when shipment of the related products occurs.
   
(2) VIP revenue disclosed above for the six months ended June 30, 2022, includes a cumulative adjustment from prior years of approximately $0.4 million decrease.
   
(3) BIS revenue from subscription contracts is typically fixed at inception of the contract and is recognized ratably over time as the services are performed and the performance obligations completed. Revenue disclosed above for six months ended June 30, 2022, includes a cumulative adjustment from prior years of approximately $0.1 million increase.

 

 

Changes in Contract Liabilities

 

The key components of changes in contract liabilities for the three months and six months ended June 30, 2023 and 2022 are as follows (in thousands):

 

   June 30, 
   2023   2022 
         
Beginning balance, January 1  $3,038   $2,399 
           
New contracts, net of cancellations   1,255    1,183 
Revenue recognized   (1,396)   (1,421)
           
Ending balance, March 31  $2,897   $2,161 
           
New contracts, net of cancellations   794    1,556 
Revenue recognized   (1,068)   (1,320)
           
Ending balance, June 30  $2,623   $2,397 

 

Current portion of deferred revenue is approximately $2.4 million, which is expected to be recognized over the next 12 months from the date of the period presented. Additionally, revenue from breakage on contract liabilities was approximately $0.1 million for the three months ended June 30, 2023 and 2022, and $0.2 million for the six months ended June 30, 2023 and 2022.

 

Changes in Accounts Receivable

 

Our customers are billed based on fees agreed upon in each customer contract. Receivables from customers were $0.3 million at June 30, 2023 and $0.5 million at December 31, 2022. An allowance is maintained for accounts receivable which is generally based on a combination of factors, including the aging of the receivables, historical collection trends, and charge-offs. Adjustment to the allowance are recorded in bad debt expense under general and administrative expenses in the condensed consolidated statement of operations. An allowance of $0.3 million existed as of June 30, 2023.

 

Shipping Costs

 

Shipping costs for product deliveries to customers are expensed as incurred and totaled approximately $0.1 million for the three months and six months ended June 30, 2023 and 2022. Shipping costs for product deliveries to customers are included in cost of goods sold in the accompanying condensed consolidated statement of operations.